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EE/S3/09/R2

2nd Report, 2009 (Session 3)

Subordinate Legislation

Remit and membership

Remit:

To consider and report on the Scottish economy, enterprise, energy, tourism and all other matters falling within the responsibility of the Cabinet Secretary for Finance and Sustainable Growth apart from those covered by the remits of the Transport, Infrastructure and Climate Change and the Local Government and Communities Committees.

Membership:

Ms Wendy Alexander
Gavin Brown
Rob Gibson (Deputy Convener)
Christopher Harvie
Marilyn Livingstone
Lewis Macdonald
Stuart McMillan
Iain Smith (Convener)

Committee Clerking Team:

Clerk to the Committee
Stephen Imrie

Senior Assistant Clerk
Katy Orr

Assistant Clerk
Gail Grant

Subordinate Legislation

The Committee reports to the Parliament as follows—

1. At its meeting on 11 March 2009, the Economy, Energy and Tourism Committee considered the following affirmative instrument—

the draft Renewables Obligation (Scotland) Order 2009.

2. The details of the draft Order and the explanatory notes can be found on the website of the Office of Public Sector Information1.

Issues raised during the debate

3. During the debate, the Committee sought clarification on the differences between the proposed scheme in Scotland and that which will operate in the rest of the UK. The Committee also asked for information on what the financial implications of these differences would mean for the Scottish Government and companies that operate in Scotland. Finally, the Committee asked for information on what the equivalent Renewable Obligation Certificates (ROCs) were for wave and tidal energy in England and Wales under the proposed scheme.

4. In his response, Jim Mather MSP, Minister for Enterprise, Energy and Tourism (“the Minister”) stated that, “The differences are essentially to do with wave and tidal energy. We are talking about five ROCs for enhanced wave generation and three ROCs for enhancing tidal generation”2. The Minister also indicated that—

“The cost implications are spread throughout the UK because ROCs are patently tradeable. Our understanding is that, even if the level of 80MW is reached in the next cycle, the cost implication will be something like 40p per household”3.

5. In relation to the issue raised on the equivalent scheme in England and Wales for marine ROCs, the Committee was informed by the Minister that there will be two ROCs for wave and tidal energy in England and Wales.

6. It should be noted that in his introductory remarks, the Minister gave notice that further legislation is still expected to maintain a higher level of support for wave and tidal power relative to the rest of the UK. He said—

“I stress the Scottish Government's intention to maintain its higher level of support for wave and tidal power under a banded obligation relative to the rest of the United Kingdom. We notified the European Commission's state aid officials of our intention to do that—subject to the outcome of our consultation—before Christmas. Unfortunately, we did not receive the Commission's formal approval before the time came to lay the order before Parliament, but we expect to receive that permission shortly. Consequently, I intend to lodge a minor amendment to the order, at the earliest possible opportunity, to introduce the enhanced bands for wave and tidal generation in Scottish waters, which we have consulted on and agreed.”4

7. The Committee questioned whether the provision in article 33 of the draft Order, which allows the Scottish Ministers to review the banding provisions, changes in any way the relationship between reviews by the Scottish Ministers and those by UK Ministers. In response, the Minister said—

“We will do things in sync, as we have done all the way through. Essentially, we are playing to our strengths—the strengths are relatively different in the two jurisdictions—to work towards common UK as well as European goals. We have been very successful of late in drawing the attention of Commissioner Piebalgs and Georg Adamowitsch, who is the EU's North Sea grid co-ordinator, to Scotland's significance and potential, and we are committed to working in harmonious sync as well as we can.”5

8. A further issue raised by the Committee during the debate relates to the issue of energy from waste. Article 3 of the draft Order proposes changes that relate to energy from waste and the Committee sought a response from the Scottish Government on what difference the new arrangements make to the Scottish Government’s support for generating energy from waste. In reply, an official from the Scottish Government responded that—

“The reason for the changes in article 3 is that, according to the energy-from-waste sector, said it had been extremely difficult for it demonstrably and accurately to measure the renewable content of a mixed waste stream. The proposals will enable energy-from-waste generators to claim to the Office of Gas and Electricity Markets that 50 per cent of their fuel mix is from renewable sources.”6

9. The Committee also noted that according to the Scottish Government (using a figure from the energy regulator, Ofgem), the additional cost on domestic households’ annual bills will be £11.41 and wanted to know what the annual cost of the provisions in the draft Order will be to the business community in Scotland. In response, the Minister said that the Scottish Government had not “drilled down to identify the specific impact on businesses” and an official said that “We simply do not know”.7

10. In response to these answers, a member of the Committee queried why a ‘business impact assessment’ had not been carried out for the draft Order to give this kind of financial information. The Minister responded to indicate such assessments will still “work in progress”8. Consequently, the Minister was asked to give an undertaking and ensure that, when he appears before the Committee with future draft statutory instruments, he will have made every effort to carry out a business impact assessment beforehand. The Minister indicated his agreement9.

11. After the debate had concluded, the Minister moved motion S3M-03564—

that the Economy, Energy and Tourism Committee recommends that the draft Renewables Obligation (Scotland) Order be approved.

12. The motion was agreed to by the Committee.

Recommendation to the Parliament

13. As a result, the Economy, Energy and Tourism Committee recommends that the draft Renewables Obligation (Scotland) Order 2009 be approved.


Footnotes:

2 Scottish Parliament, Economy, Energy and Tourism Official Report 11March 2009, Col 1814

3 Scottish Parliament, Economy, Energy and Tourism Official Report 11March 2009, Col 1814

4 Scottish Parliament, Economy, Energy and Tourism Official Report 11March 2009, Col 1814.

5 Scottish Parliament, Economy, Energy and Tourism Official Report 11March 2009, Col 1815.

6 Scottish Parliament, Economy, Energy and Tourism Official Report 11March 2009, Col 1816.

7 Scottish Parliament, Economy, Energy and Tourism Official Report 11March 2009, Col 1816.

8 Scottish Parliament, Economy, Energy and Tourism Official Report 11March 2009, Col 1817.

9 Scottish Parliament, Economy, Energy and Tourism Official Report 11March 2009, Col 1817.